A variety of options
to suit your personal circumstances.
Debt Solutions
Find out which options are available to you and start improving your financial prospects.
If you have found yourself in financial hardship it may seem like there is no way out. The truth is your debts could have arisen from a whole range of reason, some of which you had a choice but some sadly, you did not. The good news is when it comes to finding a solution to help you gain control of your finances again, there are several options available to you.
We have detailed some of those options below, please click on the buttons to read more:
1: IVA – Individual Voluntary Arrangement
An Individual Voluntary Arrangement (IVA) is a legally binding agreement with your creditors to pay your debts. It is governed by the Insolvency Act 1986 and the associated Rules. You will need to use the services of a Licensed Insolvency Practitioner (IP) to set up an IVA and the IP will monitor and oversee it whilst it remains in force. You agree to make regular payments to the IVA and these are paid to your creditors by the IP after deducting their fees.
Get an Individual Voluntary Arrangement (IVA)
You will need to use an IP to get started. They will advise you as to the suitability or otherwise of proposing an IVA.
Your IP will go through your financial details with you and prepare a proposal. Once you are happy with the proposal, a meeting with your creditors will be convened. This is a virtual meeting so you do not have to attend. Your IP will propose the IVA to your creditors including an affordable repayment plan and the period of the IVA. The period is usually five years but is often extended if you are a homeowner.
75% of the voting creditors must vote to approve the proposal before the IVA comes into effect. It is then binding on all of your unsecured creditors. Your creditors can no longer pursue you for the debts, whilst the IVA remains in force.
Your responsibilities
Your IVA can be voided if you do not keep up your repayments or the other terms of the IVA. Every year you will be required to provide details of your income and expenditure so that the level of payments can be monitored.
While you have an IVA you still have to pay your normal household bills and certain debts such as Student Loans and court fines.
Public record
Your IVA will be added to the Individual Insolvency Register, which is a public record that will be removed after the IVA ends. Your IVA will stay on your credit record for at least 6 years.
Completion
When you have successfully made all the payments and adhered to the terms of the IVA, you will receive a Certificate of Completion. This is your proof that the IVA was successfully completed. All debts bound by the IVA are legally written off at this time and cannot be pursued.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
2: IVA – Self Employed
Individual Voluntary Arrangements (IVAs) are often suitable for self employed individuals as they can protect business assets and are flexible enough to suit the demands of most small businesses.
An IVA is a legally binding agreement with your creditors to pay your debts. It is governed by the Insolvency Act 1986 and the associated Rules. You will need to use the services of a Licensed Insolvency Practitioner (IP) to set up an IVA and the IP will monitor and oversee it whilst it remains in force. You agree to make regular payments to the IVA and these are paid to your creditors by the IP after deducting their fees.
Get an Individual Voluntary Arrangement (IVA)
You will need to use an IP to get started. They will advise you as to the suitability or otherwise of proposing an IVA.
Your IP will go through your financial details with you and prepare a proposal. Once you are happy with the proposal, a meeting with your creditors will be convened. This is a virtual meeting so you do not have to attend. Your IP will propose the IVA to your creditors including an affordable repayment plan and the period of the IVA. The period is usually five years but is often extended if you are a homeowner.
75% of the voting creditors must vote to approve the proposal before the IVA comes into effect. It is then binding on all of your unsecured creditors. Your creditors can no longer pursue you for the debts, whilst the IVA remains in force.
Your responsibilities
Your IVA can be voided if you do not keep up your repayments or the other terms of the IVA. Every year you will be required to provide details of your income and expenditure so that the level of payments can be monitored.
While you have an IVA you still have to pay your normal household bills and certain debts such as Student Loans and court fines.
Public record
Your IVA will be added to the Individual Insolvency Register, which is a public record that will be removed after the IVA ends. Your IVA will stay on your credit record for at least 6 years.
Completion
When you have successfully made all the payments and adhered to the terms of the IVA, you will receive a Certificate of Completion. This is your proof that the IVA was successfully completed. All debts bound by the IVA are legally written off at this time and cannot be pursued.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
3: Debt management plan
A Debt Management Plan (DMP) is an agreement between you and your creditors to pay all of your debts.
A DMP is usually used when you can only afford to pay creditors a small amount each month or there is a short-term problem that means you need a temporary reduction in your debt repayments.
You can arrange a plan through a licensed Debt Management Company, usually for a fee. There are non-fee paying companies and charities but you should always ask at the outset how these organisations are funded. If you arrange a DMP with a company, you will make monthly payments to the company and the company distributes the monies between your creditors, after deducting its fees.
Get a Debt Management Plan
Contact an FCA authorised Debt Management Company. The company will work out your monthly payments. You will have to give details about your financial situation, such as your assets, debts, income and creditors. The company then contacts your creditors and asks them to agree to the plan.
Under a DMP, you will eventually pay your debts in full so a longer time period may be necessary. You can ask your creditors to suspend interest and charges, although your creditors do not have to agree to this. A DMP is not legally binding so creditors may still pursue you for your outstanding debts despite the plan being in place.
Costs
Some companies will charge an initial set up fee and a handling fee each time you make a payment. Make sure you understand the costs of your plan and how you pay for it.
Eligibility
DMPs can only be used to pay ‘unsecured’ debts so any mortgage arrears, court fines and student loans will have to be paid outside of the DMP. Normally, any debts due to HMRC (including tax credit overpayments) cannot be paid through a DMP.
Your responsibilities
Your DMP may be cancelled if you do not keep up your agreed monthly repayments.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
4: Informal Arrangement
Similar to Debt Management Plans, informal agreements involve direct contact with the creditors and an agreement with the creditors as to the repayment amount. Debts have to be paid in full and the arrangements are not legally binding.
As an informal agreement is similar to a debt management plan, this means contacting your creditors directly and negotiating a monthly payment with them.
You will probably need to prepare a list of assets and liabilities, income and expenditure beforehand.
Creditors may not agree to your offer and may require more money each month.
Under an informal arrangement, you will pay your debts in full so a longer time period may be necessary. You can ask your creditors to suspend interest and charges, although your creditors do not have to agree to this. An informal arrangement is not legally binding so creditors may still pursue you for your outstanding debts despite the plan being in place.
Eligibility
Informal arrangements can only be used to pay ‘unsecured’ debts so any mortgage arrears, court fines, student loans and debts due to HMRC (including tax credit overpayments) must be paid outside of the arrangement.
Your responsibilities
Your creditors may cancel the arrangement if you do not keep up your agreed monthly repayments.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
5: Debt relief order
A Debt Relief Order (DRO) is one way to deal with your debts as long as you meet the criteria. A DRO normally lasts 12 months after which you will be discharged, and your debts will be written off.
Costs
There is a one time set up fee of £90.
Criteria
You will be eligible if you meet all of these criteria:
- you owe less than £20,000 to your unsecured creditors
- you have less than £50 a month spare income after taking into account all of your necessary costs
- you have assets worth less than £1,000
- you have lived or worked in England, Wales or Northern Ireland within the last 3 years
- you have not applied for a DRO within the last 6 years
Restrictions
If you successfully apply for a DRO you cannot –
- borrow more than £500 without telling the lender about your DRO
- act as a director of a company
- create, manage or promote a company without the court’s permission
- manage a business without telling those you do business with about your DRO
If you want to open a bank account, you may also have to tell the bank or building society about your DRO.
The restrictions usually last for 12 months. They can be extended if careless or dishonest behaviour caused your debt problem, for example, if you lied to a lender to obtain credit.
What you need to know
While you have a DRO, you still have to pay your normal household bills and certain debts such as student loans and court fines.
DROs can be cancelled if your finances improve whilst the DRO is in force or if you do not cooperate with the Official Receiver, for example, if you do not give them the information they ask for.
Public Record
Your DRO will be added to the Individual Insolvency Register, which is a public record. The record is removed after the DRO ends. Your DRO will stay on your credit record for at least 6 years.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
6: Bankruptcy
An option for sorting out your debt problems might be filing for bankruptcy. You can apply for bankruptcy if you cannot pay back your debts.
As well as applying for bankruptcy yourself, someone else you owe money to (a creditor) can apply to make you bankrupt, even if you do not want them to. For a creditor to make you bankrupt, you must owe them at least £5,000. You can apply to be made bankrupt online.
Costs
There is a one time set up fee of £680.
Advantages of going bankrupt
When the bankruptcy order is over, you can make a fresh start – in many cases this can be after a year. Other advantages of going bankrupt include:
- you no longer have to deal with your creditors
- you are allowed to keep household goods and a reasonable amount of money to live on
- creditors have to stop most types of court action against you following a bankruptcy order
- the money you owe will be written off once your bankruptcy ends
Disadvantages of going bankrupt
- if you have surplus disposable income, you may be asked to make payments towards your debts for a period of 3 years
- it will be more difficult to take out credit while you are bankrupt, and your credit rating will be affected for 6 years
- if you own your home and you cannot raise sufficient equity, the property might have to be sold
- some of your possessions might have to be sold, for example, your car if it has a high value (over £3,000) and any luxury items you own
- it may affect your employment, subject to your contract of employment
- if you own a business, bankruptcy may have severe consequences
- going bankrupt can affect future applications regarding immigration status
- your bankruptcy will be published on the Individual Insolvency Register
What happens at the end of bankruptcy?
Your bankruptcy will normally end after a year. The Official Receiver will inform you when it is over. Most debts that have not been paid will be written off, although some debts such as court fines and student loans can never be written off.
In extreme cases, the Official Receiver may apply for a Bankruptcy Restriction Order. This can last up to 15 years and will restrict your financial affairs. This order could be made if, for example, you do not cooperate with the Official Receiver, or you take on debts knowing that you will not be able to pay them back.
Public Record
Your bankruptcy will be added to the Individual Insolvency Register, which is a public record. The record is removed after the bankruptcy ends. Your bankruptcy status will stay on your credit record for at least 6 years.
Call us today to speak with one of our advisors who can help you understand your options and find out the right choice for you.
We’re here to help on Freephone 8000485727.
Useful information
If you are struggling financially and need to work with your creditors, the following guide may help www.gov.uk/options-for-paying-off-your-debts. This guide is produced by The Insolvency Service, the government agency responsible for administering the insolvency system in England and Wales.
You should always obtain professional advice before entering into any financial solution. Not all solutions may be available to you. Free advice is available at The Money Advice Service.